SS*« z Contents To the Shareholders 7 Oil Field Services 23 Electronics and Instrumentation 35 Management 36 Financial Review 38 Financial Statements Cover: Schlumberger wireline logging recorder. Inside cover: Mixture of oil and drilling mud. In Brief 1968 Operating Revenues, $409,085,000 $369,222,000 $343,136,000 Net Income 41,045,000 31,538,000 28,149,000 Per Share Net Income 85.32 14.12 $3.68 Dividends Paid. 1.43 1.17 To the An increase of 30 percent in earnings points to a suc- Shareholders cessful 1968. The sharp upward trend which started in the fourth quarter of 1967 continued with the same momentum during each quarter of 1968. In- creased sales and higher earnings in every single oil field service subsidiary accounted for most of the earnings improvement. During the year, crude oil production, demand for petroleum products, and exploration expenditures for oil and gas increased worldwide at a higher pace than in any single year of the past decade. The de- cline in land drilling in the United States was stopped for the first time in ten years. Offshore activity ex- panded worldwide, mainly in the Eastern Hemi- sphere. The difficult ciuestion is to assess whether 1968 is the beginning of a new oil economic cycle. Is it pos- sible or even probable that demand for oil products, crude oil production and capital expenditures for exploration will increase at an accelerating rate dur- ing the next five years? The staggering figure of world demand for oil products projected for 1980 justifies a positive answer. Results of electronic operations improved over the previous year. However, profit on sales and re- turn on investment are not yet satisfactory. Sub- stantial losses in our French electronic and instru- ments subsidiary and at our general aviation instru- ment plant in Wichita, Kansas had an adverse im- pact on overall electronic results. Sales and earnings of the Furniture Division im- proved significantly. On February 27, 1969, the Board of Directors in- creased the quarterly dividend to 50 cents per share. This corresponds to a yearly rate of $2.00 per share compared to the previous rate of $1.50, an increase of 33 percent. February 28, 1969 IJJOUu ÍIOÍLCU^ Jean Riboud President Schiumberger Limited DIRECTORS OFFICERS SCHLUMBERGER John de Menil* Jean Riboud OPERATING SUBSIDIARIES Chairman of the Board President and Chief Executive Officer AND DIVISIONS Robert G. Cowan Ame Vennema Schiumberger Limited is Chairman, National Newark Chairman, Executive Committee a technology-oriented & Essex Bank William J. Gillingham multinational company. Leland E. Dake Executive Vice President It offers more than William J. Gillingham John E. Rhodes 70 different technical Joseph C. Hutcheson, III Executive Vice President operations to the oil industry, worldwide. Partner, Baker, Botts, Leland E. Dake It manufactures Shepherd & Coates Senior Vice President Everett F. Stratton electronic and electrical Paul A. Lepercq*° Vice President instruments and components for President, Lepercq, de Neuflize & Co. Nick A. Schuster industrial, commercial, Amédée Maratier Vice President educational, aerospace President, Forex Edwin N. West and military applications. Charles C. Parlin Secretary and General Counsel Chairman, Celanese Corporation Paul A. Lepercq Partner, Shearman & Sterling Chairman, Finance Committee Jean Riboud*° Herbert G. Reid Françoise Schiumberger Primat Controller and Chief Financial Officer René Seydoux William Niles Ame Vennema*° Treasurer ^Member Executive Committee °Memher Finance Committee STOCK TRANSFER OFFICES First National City Bank, New York City Bank of the Southwest, Houston, Texas REGISTRARS Morgan Guaranty Trust Company of New York First City National Bank, Houston, Texas OÏL FIELD SERVICES Plastic Applicators nuclear research, and telemetry Solartron Houston, Texas applications. Farnborough, England Schiumberger Well Services Anti-corrosion plastic coatings for Laboratory instruments for Houston, Texas oil field tubular goods and for EME PHOTOELECTHIC PEINCETON, NEW JBBSBY electronic test and measurement, industrial equipment used in the Photomultiplier tubes, image principally oscilloscopes and Schiumberger of Canada electrical, chemical and process intensifiers and channel digital voltmeters, data loggers, , Calgary, Canada industries. Non-destructive testing multipliers. analog hybrid computers, radar of pipe for the oil, chemical and simulators and video map Schiumberger Surenco mining industries. EMB HATBORO instruments. Caracas, Venezuela HATBOBO, PENNSYLVANIA Forex Transfer function analysis Société d'Instrumentation Société de Prospection Paris, France instruments for dynamic analysis, Electrique Schiumberger Schiumberger Paris, France The largest European drilling hydraulic shakers and fatigue Paris, France company with 58 rigs for both testing machines. VLLLACOUBLAY GROUP . Schiumberger Overseas offshore and land drilling. Digital instrumentation including Weston Instruments London, England counters and multimeters, Newark, New Jersey Dowell Schiumberger instrumentation tape recorders, London, England Panel meters, portable meters, These companies perform pressure and flow transducers, (Associated company, 50% owned.) light meters, aircraft instruments, electrical logging, well completion light-sensitive recorders, Cementing, acidizing, fracturing, relays, digital panel meters, and production logging services potentiometers. formation testing and other well bi-metal thermometers, for the oil industry. Anywhere in services. tachometers, laboratory standard ELBCTEONICS DIVISION the world that an oil company calibrators. Professional audio equipment drills a well, one of these ELECTRONICS AND for radio studio and mobile use companies will offer technical INSTRUiVIENTATION Weston Components including tape recorders, mixing services for data gathering or for Archbald, Pennsylvania amplifiers, turntables. well completions. EiUR Electronic and mechanical INDUSTRIAL CONTROL DIVISION Princeton, New Jersey contract work, precision Panel meters, relays, temperature Johnston Testers Houston, Texas EME TELEMETBY potentiometers, filters, regulators and transducers, SABASOTA, FLORIDA industrial x-ray thickness gas analyzers. Mechanical services and tools, Airborne and ground based gages. Miniature servo motors, well completion equipment and telemetry equipment and systems synchros, and resolvers. drill stem testing for the oil for data acquisition, transmission FURNITURE DIVISION industry. and processing. Heath Benton Harbor, Michigan Daystrom Vector Cable EMB COMPUTEB World's largest producer of South Boston, Virginia Houston, Texas MINNEAPOLIS, MINNESOTA electronic equipment in kit form Virtue Insulated and armored cables, Scientific digital computers for for home entertainment, marine Compton, California connectors, for well logging, specialized markets principally in navigation, amateur radio. Dinette sets and other oceanography, nuclear testing, geophysics, oil well logging, Educational, industrial and household, commercial and and BMPhlWcal a^plnra.t.inn. industrial process control, scientific laboratory instruments. industrial furniture. OIL FIELD SERVICES Schiumberger Schiumberger wireline services reached an all time Wireline record in 1968 for both revenues and earnings. Services Service revenue increased 14%, compared to an average 5% annual increase in the past ten years. Free world crude oil production doubled during the last ten years—from 16 million barrels per day to 32 million barrels per day in 1968. The average yearly increase was 1.6 million barrels per day dur- ing this period. In 1968, however, production in- creased by 2.8 million barrels per day, nearly double the annual rate of increase during the previous decade. To meet the greatly increased world-wide demand for petroleum products, there were 2200 active drill- ing rigs throughout the world at year end, or 15% more than were in operation at the end of 1967. It is widely predicted by oil economists that crude oil production must double in the next ten years, as it has doubled since 1958; this would mean an annual increase of somewhat more than was actually attained during the year 1968. If this is the case, the 1968 rate of increase could be regarded as the necessary level for the coming years. The Middle East conflict of 1967, resulting in the lengthening of supply routes due to the closing of the Suez Canal, spurred the exploration efforts of the oil companies in new and untried regions. Initial exploratory drilling was undertaken in some six of the recently independent countries of Africa, and several European countries. Offshore exploration moved to the continental shelf area in the South China Sea, the Sea of Japan and Indonesia. Explora- tory drilling increased also in many nations of both North and South America in an effort to increase their known reserves and to insure higher produc- tion levels. The most outstanding discovery in many years was announced at the Atlantic Richfield-Humble operations on the North Slope of Alaska, at Prud- hoe Bay. This arctic area is largely inaccessible except by airhft, or by tractor-powered sled trains during the winter months when — 50°F tempera- tures are common. In summer, the tundra is an impassable bog. The oil companies and Schium- berger have accelerated activity this winter in further development drilling and evaluation efforts in this vast, potentially rich territory. The greatest increase of oil production took place in Libya where a 50% rise pushed the daily produc- tion to 2.5 million